Vietnam’s recent devaluation of the dong will have a limited impact on the real estate market as the market is largely fueled by domestic demand and dominated by domestic supply, property research firm CBRE said in a new report.

Vietnam’s residential property market is dominated by domestic supply, with supply by foreign developers only accounting for less than 10 percent, according to the report, released on Wednesday.

“Hence, impact of the currency movement to prices would be limited. Prices would be affected, however, when currency devaluation creates pressure on inflation,” the report said.

On August 19 the State Bank of Vietnam, the nation's central bank, devalued the dong for the third time this year in a bid to protect the export sector by countering the adverse affects of a strengthening dollar and yuan devaluation.

On the same day it also widened the dollar/dong trading band for the second time in a week. Year to date, the dong has lost 5 percent value against the dollar, the largest devaluation per annum since 2011.

Historically, it is observed that property prices have been affected by property supply and demand more than currency movement. The dong has depreciated between -0.9 percent and 5.8 percent every year in the past five years, while residential prices in Hanoi have moved between -11 percent and 13 percent every year.

CBRE said while local investors with cash savings in dong may turn to real estate, foreign buyers may not be too much drawn by a cheaper dong.

“Foreign buyers might be less affected by a cheaper dong, as Vietnam’s properties, even before the recent devaluation, were considered attractive for relatively lower prices and higher yield, compared with neighboring markets such as Thailand, Singapore, and Hong Kong,” the company said.

Foreign buyers at this stage are more interested in what and how they can buy, rather than prices, two months after the revised Law on Real Estate Business and Housing Law took effect, it said.

Even if China’s yuan is further devalued, impacts to Vietnam’s real estate market are expected to be modest, CBRE said.

China has registered around US$8 billion of investment in Vietnam but mostly in manufacturing, mining and infrastructure.